7KH2IILFLXPGHIXQFWRUXPRI7RPiV/XLVGD9LFWRULD
ZULWHUVRFFDVLRQDOO\PHQWLRQWKHXVHRIVSHFLDOSUD\HUVIRUWKHGHDGEXWIDUPRUHIUH TXHQWDUHUHIHUHQFHVWRSVDOPVLQJLQJEHIRUHDQGDIWHUWKHIXQHUDO3DUWLFXODUO\LQWHUHVW LQJZLWKLQWKHILUVWPLOOHQQLXPLVDWKFHQWXU\9LVLJRWKGRFXPHQWWKDWFRQWDLQVSURE DEO\WKHHDUOLHVWIXOOGHVFULSWLRQRIDEXULDOULWH,WVWDWHVLQGHWDLO³ZKDWWKHFOHUJ\RI DQ\FLW\KDYHWRGRLIWKHLUELVKRSIDOOVYLFWLPWRDIDWDOLOOQHVV´WROOLQJEHOOVZDVKLQJ DQGGUHVVLQJWKHERG\DQGSODFLQJLWRQWKHELHUZKLOHSVDOPVDQGZRUVKLSDUHUHFLWHG DQGVXQJXQFHDVLQJO\XSXQWLOWKHJUDYHLVVHDOHG7KLVOLWXUJLFDOFXVWRPPD\KDYH H[WHQGHGDWWKDWWLPHWRWKHZKROHDUHDQRWMXVWIRUELVKRSVEXWIRUORZHUFOHUJ\DQG OD\PHQDVZHOO
7KHSUHVXPDEO\WKFHQWXU\6DFUDPHQWDULXP/HRQLDQXPDQG*HODVLDQXPDUHWKH HDUOLHVWWZRPDQXVFULSWVWRLQFOXGHJURXSVRISUD\HUVDQGRWKHULWHPVIRUWKH0DVVIRU WKH'HDG%RWKIROORZWKH5RPDQULWHDQGFRQWDLQSDVVDJHVIRUUHFLWDOE\WKHFHOHEUDQW RIYDULRXVPDVVHVEXWRPLWUHVSRQVHVE\WKHFKRLURUFRQJUHJDWLRQ%RWKLQFOXGHVHY HUDOIRUPXODHIRUWKHSXUSRVHILYHXQGHUWKHWLWOH/HRQLDQXPVXSHUGHIXQFWRVZKLOHWKH IXOOHUEHWWHURUJDQL]HG*HODVLDQXPKDVVHYHQ
&RPPHQGDWLRDQLPDHGHIXQFWLV 0LVVDSURGHIXQFWRVDFHUGRWH
0LVVDLQQDWDOVDQFWRUXPYHODJHQGXPPRUWXRUXP 0LVVDSURGHIXQFWRQXSHUEDSWL]DWR
0LVVDSURGHIXQFWLVGHVLGHUDQWLEXVSRHQLWHQWLDPHWPLQLPHFRQVHTXHQWXU 0LVVDSURGHIXQFWLVOXFLV
,WHPDOLDLQGLHGHSRVLWLRQLVGHIXQFWL9,,HW;;;GLHUXP
7KHRWKHUPDMRUGRFXPHQWRIHDUO\OLWXUJLFDOKLVWRU\LVWKH6DFUDPHQWDULXP*UH JRULDQXPRIWKHVDPHSHULRGZKLFKFRQWDLQVDUDWKHUGLIIHUHQW5RPDQULWHWKDQWKH SUHYLRXVWZR
,QLWLDOO\0DVVHVIRUWKH'HDGSUREDEO\GLIIHUHGRQO\VOLJKWO\IURPRWKHUPDVVHV 7KHWKFHQWXU\$PDODULXVDSXSLORI$OFXLQVWDWHVWKDWD5HTXLHP0DVVKDVQR*OR ULDDOOHOXLD&UHGRRUNLVVRISHDFHEXWKLVVWDWHPHQWVFDQQRWUHSUHVHQWJHQHUDOSUDF WLFHDVVRXUFHVVKRZWKHPRYHPHQWVFRPSRVLQJLWZHUHQRWXQLIRUPLQWKH0LGGOH
$JHVEXWYDULHGE\SHULRGORFDWLRQDQGWUDGLWLRQ$QH[DPSOHLVWKH0R]DUDELFOLWXUJ\
ZKLFKSUREDEO\UHWDLQHGDOOHOXLDVLQWKH0DVVIRUWKH'HDGIRUDVORQJDVWKHOLWXUJ\
UHPDLQHGLQXVH
4XRWHGE\+HUEHUW7KXUVWRQ³%XULDO&KULVWLDQ´LQ7KH&DWKROLF(QF\FORSHGLD1HZ<RUN*LOPDU\
6RFLHW\±,,,
)HUQDQG&DEURO³*HODVLHQ/H6DFUDPHQWDLUH´'LFWLRQQDLUHG¶$UFKpRORJLHFKUpWLHQQHHWGHOLWXUJLH 3DULV/HWRX]H\HW$Qp9,
2IWKHULWHVRIWKH3URSHULQWKH7ULGHQWLQH5HTXLHPWKHVRXUFHRIWKHLQWURLWJUDG XDODQGFRPPXQLRQWH[WV5HTXLHPDHWHUQDPDQG/X[DHWHUQDLVWKH%LEOHZKLOHWKH WUDFW$EVROYH'RPLQXVFRPHVIURPDPHGLHYDOSUD\HUDQGWKHRIIHUWRU\'RPLQH-HVX
&KULVWHIURPDSUD\HURIUHFRPPHQGDWLRQRIWKHVRXO7KHVHTXHQFH'LHVLUDHLVWKHODW HVWDGGLWLRQWRWKH3URSHUIRUWKH0DVVIRUWKH'HDG7KH2UGLQDU\ULWHVLQWKH5HTXLHP 0DVVRPLWWKH*ORULDDQGWKH&UHGREXWRWKHUZLVHRQO\GHSDUWIURPWKHFXVWRPDU\LQ WKHODVWVHQWHQFHRI$JQXV'HLPLVHUHUHQRELVZKLFKLVUHSODFHGRQERWKRFFDVLRQVE\
GRQDHLVUHTXLHPDQGLQWKHILQDOSUD\HUGRQDQRELVSDFHPIRUZKLFKGRQDHLVUHTXLHP VHPSLWHUQDPFDQEHVXEVWLWXWHG
$OWKRXJKWKHVHWH[WVDUHWKHROGHVWULWHVLQWKH0DVVIRUWKH'HDGPDQ\RWKHUSLHFHV DUHIRXQGLQPHGLHYDOVRXUFHV7KHLQWURLW5HTXLHPDHWHUQDPDSSHDUVQRWRQO\ZLWK WKHSVDOPYHUVH7HGHFHWK\PQXV'HXVEXWZLWKWKHYHUVLFOHV0LVHUHUHPHL'RPLQH
$QLPDHMXV'HSURIXQGLVDQG(WVLFXWLQ$GDPLQPHGLHYDOFRGLFHV2QHHDUO\YHUVLRQ RIWKHDQWLSKRQUXQV5RJDPXVWH'RPLQH'HXVQRVWHU3V(WVLFXWLQ$GDP7KHUH VSRQVRU\6XEYHQLWHVDQFWL'HLZKLFKLVQRZSDUWRIWKHIXQHUDOOLWXUJ\ZDVXVHGHDUOLHU DVDQLQWURLW7KHSURFHVVLRQDO5HVSLFH'RPLQHLQWHVWDPHQWXPWXXPFDQDOVREHIRXQG LQWKDQGWKFHQWXU\5HTXLHPVHLWKHUDVDQDOWHUQDWLYHRUDVWKHUHJXODULQWURLWWR WKHVHFRQG0DVVRIWKH'HDG2WKHUSURFHVVLRQDOWH[WVXVHGDUH6LHQLPFUHGLPXV3V(W VLFXWLQ$GDPDQG6LFXWSRUWDYLPXVLPDJLQHP3V(WVLFXWLQ$GDP
7KHHDUOLHUJUDGXDOWH[WZDV4XL/D]DUXPUHVXVFLWDVWLZKLFKWRGD\LVDUHVSRQVRU\
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¶V0DVVIRU WKH'HDG0DQ\HDUO\VRXUFHVUHSODFH,QPHPRULDDHWHUQDZLWK$QLPDHMXVLQERQLV GHPRUDELWXU7KLVYHUVLFOHLVDOUHDG\IRXQGLQWKHWKFHQWXU\DQGDSSHDUVODWHULQ
,QWURLW(VGUDV±3VDOPV±*UDGXDO(VGUDV±3VDOPV&RPPXQLRQ (VGUDV±
'RP-DFTXHV)URJHUpG/H&RGH[GHOD%LEOLRWKqTXH$QJHOLFDGH5RPH;,HVLqFOH*UDGXHO HWWURSDLUHGH%RORJQH%HUQ/DQJ 3DOpRJUDSKLH0XVLFDOH>KHUHDIWHU30@YROY /H&RGH[9,GHOD%LEOLRWKqTXH&DSLWXODLUHGH%pQpYHQW;,H±;,,HVLqFOH*UDGXDOGH%pQpYHQW DYHFSURVDLUH WURSDLUH6ROHVPHV'HVFOpH 30YROY
/H&RGH[GHOD%LEOLRWKqTXH1DWLRQDOHGH3DULV;,HVLqFOH*UDGXHOGH6DLQW<ULHL[6ROHVPHV
'HVFOpH 30YROIROU
&KULVWLDQ9lWHUOHLQHG*UDGXDOH3DWDYLHQVH:LHQ)DNVLPLOH$EWHLOXQJ0LWWHODOWHUYRO .DVVHO%DVHODQG/RQGRQ%lUHQUHLWHU
)UHQFKDQG6SDQLVKJUDGXDOV2WKHUYHUVLFOHVIRXQGZLWKWKHPDLQSDUWRIWKHJUDGXDO DUH&RQYHUWHUHDQLPDPHDDQG4XL/D]DUXPUHVXVFLWDVWL
7KHWUDFW$EVROYH'RPLQHZDVLQPDQ\HDUO\VRXUFHVEXW'HSURIXQGLV3VDOPV
±DSSHDUVDVZHOO$QRWKHUHDUOLHUYDULDQWLVWRXVHWKHWH[W&RQYHUWHUHDQLPD PHDIURP3VDOP7KHWKFHQWXU\6DLQW<ULHL[JUDGXDOPHQWLRQHGFRQWDLQVWKH WUDFW6LFXWFHUYXVEXWWKHJUDGXDO6LDPEXOHPDSSHDUVWKHUHDVDQDOWHUQDWLYH
7KHRIIHUWRU\'RPLQH-HVX&KULVWHFRQVLVWHGRULJLQDOO\RIVHYHUDOYHUVHVZKLFK ZHUHVWHDGLO\GURSSHGIURPODWHUOLWXUJLFDOERRNVH[FHSWIRU+RVWLDVHWSUHFHV2WKHURI IHUWRU\WH[WVZHUH'RPLQHFRQYHUWHUHHWHULSH(UXH'RPLQHDQLPDVHRUXP,OOXPLQD RFXORVPHRV0LVHUHUHPLKL'RPLQH2SLH'HXV6XEYHQLWHVDQFWL'HL
7KHELJJHVWGLIIHUHQFHDSSHDUVLQWKHPDQ\WH[WVIRUWKHFRPPXQLRQVHYHUDORI ZKLFKSHUVLVWHGLQWKH2IILFHIRUWKH'HDGRUEXULDOVHUYLFH7KHDQWLSKRQ(JRVXP UHVXUUHFWLRZDVRQFHSDUWRIWKHFRPPXQLRQDQGODWHURI/DXGVLQWKH2IILFHIRUWKH 'HDG7ZRRWKHUHDUO\FRPPXQLRQVDUH&UHGRTXRG5HGHPSWRUWKHUHVSRQVRU\DIWHU WKHILUVWOHVVRQLQWKHILUVWQRFWXUQRI0DWLQVDQGWKHODVWVHQWHQFHEHJLQQLQJ&KRUXV
$QJHORUXPIURPWKHDQWLSKRQ,QSDUDGLVXP$QRWKHUHDUO\FRPPXQLRQWH[WLV2PQH TXRGGDWDOVRD9HVSHUVDQWLSKRQLQWKH2IILFHIRUWKH'HDG7KHQH[WFRPHVLQWKH WKFHQWXU\6DQNW*DOOHQPDQXVFULSW'RQDHLV'RPLQHUHTXLHPVHPSLWHUQDPHWUH SOHVSOHQGRUHDQLPDVVDQFWRUXPHWRVVDHRUXPSXOOXOHQWLQORFRVXR$EVROYH'RPLQH LVRQHRIVHYHUDOFRPPXQLRQVWRDSSHDULQWK±WKFHQWXU\PDQXVFULSWVRI0DVVHV IRUWKH'HDG7KHWH[WLVPRVWIUHTXHQWLQ6RXWKHUQ)UHQFK$XVWULDQ*HUPDQDQGHDU O\/RWKDULQJLDQVRXUFHVEXWIRXQGDOVRLQJHRJUDSKLFDOO\UHPRWHSODFHVVXFKDV6W
<ULHL[%RORJQD$L[OD&KDSHOOHDQG%XUJRV$OVRXVHGDVFRPPXQLRQVZHUH$QLPDV GHFRUSRUH$XGLYLYRFHPGHFDHOR3DUWHPEHDWDHUHVXUUHFWLRQLV3URTXRUXPPHPR ULD6LFXW3DWHUVXVFLWDWPRUWXRVDQG7XDP'HXVGHSRVFLPXV
7KH6SDQLVKOLWXUJLFDOVRXUFHVRIWKHWK±WKFHQWXU\VKRZVRPHW\SLFDOWUDLWVLQ WKHFRPSRVLWLRQRILWHPVLQWKH0DVVIRUWKH'HDG7KHFRPPRQHVWJUDGXDOLV5HTXLHP DHWHUQDPIRXQGLQWKHVRXUFHVZLWKWZRYHUVLFOHV$QLPDHHRUXP,QPHPRULDDHWHUQD RIHTXDOSRSXODULW\+RZHYHUDQRWKHUWH[W6LDPEXOHPLQPHGLRXPEUDHPRUWLVDOVR DSSHDUVIURPWLPHWRWLPHZLWKWKLVOLWXUJLFDOIXQFWLRQ7KHUHJLRQ¶VPRVWYDULHGSLFWXUH DSSHDUVZLWKWKHWH[WFKRLFHVIRUWKHWUDFW'HSURIXQGLVWKHFRPPRQHVWWUDFWLQWKH 0DVVIRUWKH'HDGLQ&HQWUDO(XURSHLVZLGHVSUHDGLQ6SDQLVKDQG0R]DUDELFVRXUFHV DVZHOODQGZDVOLQNHGZLWKWKHEXULDOVHUYLFH7KHQH[WDOWHUQDWLYHLV6LFXWFHUYXVDOVR IRXQGTXLWHIUHTXHQWO\RXWVLGHWKH,EHULDQSHQLQVXODLQOLWXUJLFDOERRNVIURP1RUWKHUQ (XURSH DQG IURP 6DOLVEXU\ DQG DFWLQJ DV WKH H[FOXVLYH WUDFW IRU WKH SUH7ULGHQWLQH SRO\SKRQLF6SDQLVK5HTXLHP7KHWKLUGLWHPXVHGLQUHJLRQVLQIOXHQFHGE\&DWDORQLD
&RGH[GHOD%LEOLRWKqTXHGH6DLQW*DOOpGSDU$QGUp0RFTXHUHDX6ROHVPHV$EED\H6DLQW 3LHUUH 30YRO6HHDOVR/H&RGH[9,GHOD%LEOLRWKqTXH&DSLWXODLUHGH%pQpYHQW
;,H±;,,HVLqFOH*UDGXDOGH%pQpYHQWDYHFSURVDLUH WURSDLUH6ROHVPHV/DQJ 30YRO
Y
DQG6RXWKHUQ)UDQFHLV'LFLW'RPLQXVHJRVXP9(WRPQLVTXLYLYLW$QRIIHUWRU\
VSHFLDOW\LVIRUERWK+RVWLDVHWSUHFHVDQGWKHVHFRQGYHUVLFOH5HGHPSWRUDQLPDUXP RPQLXPWREHXVHGLQ$QGDOXVLDDQG7ROHGRHYHQLQWKHHDUO\WKFHQWXU\$QRWDEO\
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
3RO\SKRQLF0DVVHVIRUWKH'HDG IURPHDUOLHVWWRWKHILUVWWKFHQWXU\GHFDGH
7KHVDPHSHULRGWKDWEURXJKWDVWHDG\UHOHJDWLRQRI*UHJRULDQFKDQWDOVRJDYHELUWKWR RQHRIWKHPRVWLPSRUWDQWJHQUHVRIFKXUFKPXVLFWKHSRO\SKRQLF2UGLQDU\RIWKH0DVV )RUHPRVWLQFUHDWLQJWKHVHLQ±ZHUH)UHQFKDQG)UDQFR)OHPLVKFRPSRVHUV )RUHLJQHUVZHUHLQDPDMRULW\DPRQJFRPSRVHUVZRUNLQJLQ,WDO\HYHQLQWKHV EXWWKH\ZHUHVWHDGLO\UHSODFHGE\,WDOLDQVZKRWRRNWKHOHDGLQFRPSRVLQJH[DPSOHV RIWKHSRO\SKRQLF2UGLQDU\DVZHOO7KLVFDQEHGHPRQVWUDWHGEHVWE\WKHIDFWWKDWRQO\
PDVVHVDSSHDUHGLQSULQWLQ,WDO\EHIRUHEXWRYHUPDLQO\E\,WDOLDQVLQ WKHSHULRG±+RZHYHUSRO\SKRQLFPDVVHVIRUWKHGHDGDFFRXQWIRURQO\D VPDOOSURSRUWLRQRI5HQDLVVDQFHPDVVFRPSRVLWLRQWRRXUNQRZOHGJHRQO\SRO\
SKRQLF5HTXLHPVZHUHFRPSRVHGLQWKHWZRDQGDKDOIFHQWXULHVEHWZHHQDQG 2QHUHDVRQZDVWKHSUH7ULGHQWLQHODFNRIXQLIRUPLW\LQWKH3URSHURIWKH0DVV IRUWKH'HDGDQRWKHUWKDWSRO\SKRQLFUHQGHULQJVRIWKH5HTXLHPZHUHVWLOOQRWWKRXJKW
,WFRQWDLQVDWZRYHUVHRIIHUWRU\0LVVDOGHO&DUGHQDO0HQGR]D7ROHGRF±0DGULG%LE OLRWHFD1DFLRQDO06YDIROGYL±GYLY0LVVDOHWROHWDQXPFIROFFF[[±FFF[[Y0LVVDOH
*LHQQHQVLV>-DHQ@IROFO[[[LLL
&ODXGH*D\³)RUPXODLUHVDQFLHQVSRXUODPHVVHGHVGpIXQWV´eWXGHVJUHJRULHQQHV,,
*D\IRXQGIRXUVXFKFRPPXQLRQV$TXLWDQLDWKFHQWXU\%D]DVWKFHQWXU\6DQ0LOOiQD%H QHGLFWLQHPRQDVWHU\QHDU%XUJRVWKFHQWXU\%XUJRV06WKFHQWXU\
3KLOLS7-DFNVRQ³0DVVSRO\SKRQ\´LQ&RPSDQLRQWR0HGLHYDODQG5HQDLVVDQFH0XVLFHGE\
7HVV.QLJKWRQDQG'DYLG)DOORZV2[IRUG2[IRUG83±
DSSURSULDWHLQVRPHSODFHVHYHQLQWKHWKFHQWXU\2QWKHRWKHUKDQGWKHQXPEHU FDQEHFRQVLGHUHGKLJKE\FRPSDULVRQZLWKODWHUSHULRGVGXHSULPDULO\WRWKHPXOWLWXGH RIVDLGRUVXQJYRWLYHPDVVHV0RQGD\5HTXLHP7XHVGD\$QJHOV:HGQHVGD\6W
$QGUHZ7KXUVGD\WKH+RO\6SLULW)ULGD\WKH+RO\&URVV6DWXUGD\WKH9LUJLQ0DU\
DQG6XQGD\WKH+RO\7ULQLW\DQGVHFRQGDULO\WRIRXQGDWLRQVVHWXSE\LQGLYLGXDOV RUFRQIUDWHUQLWLHVWLHGWRWKHFHOHEUDWLRQRI0DVVRQDVSHFLILFGD\LQWKH\HDU7KHVH ZHUHPRVWIUHTXHQWO\IRU0DU\EXWDOVRIRU7ULQLW\WKH+RO\&URVVWKH6DFUDPHQW RUVRPHORFDOSDWURQEHFDXVHVXFKD0DVVZRXOGEHFRPHD5HTXLHP0DVVDIWHUWKH EHQHIDFWRU¶VGHDWKZKLFKPD\DFFRXQWIRUWKHUHODWLYHO\ODUJHQXPEHURISRO\SKRQLF PDVVHVIRUWKHGHDGDQGZLWKWKHJUDGXDOFHVVDWLRQRIWKLVV\VWHPRILQVWLWXWLRQVIRU WKHODWHUGHFOLQH$QRWKHUWKHRU\LVWKDWWKHFRPSRVLWLRQRI5HTXLHPVPD\KDYHEHHQ FRQQHFWHGZLWKWKHIRXQGDWLRQLQRIWKH2UGHURIWKH*ROGHQ)OHHFHZKRVHPHHW LQJVDOZD\VLQFOXGHGD0DVVIRUWKH'HDGDORQJVLGHWKRVHLQKRQRURI0DU\WKH+RO\
6SLULWDQGWKH2UGHU¶VSDWURQVDLQW6W$QGUHZ$WWKHVDPHWLPHWKHFRPSRVHUIURP WKH)UDQFR%XUJXQGLDQUHJLRQRISRO\SKRQLF5HTXLHPVWKDWWKULYHGWKHUHDQGODWHULQ WKH+DEVEXUJODQGVDOVRFRPSRVHGPDVVHVWRWKHPHORG\³O¶+RPPHDUPp´ZKLFKOHG WRVXVSLFLRQVWKDWWKHVHWZRZHUHFRQQHFWHGZLWKWKH2UGHURIWKH*ROGHQ)OHHFH $SRO\SKRQLFPDVVIRUWKHGHDGFRQVLVWHGRILQWURLWJUDGXDOWUDFWVHTXHQFHRI IHUWRU\DQGFRPPXQLRQPRYHPHQWVDORQJVLGHWKH.\ULH6DQFWXVDQG$JQXV'HL,Q WKHSHULRGH[DPLQHGRQO\RQH5HTXLHPDSSHDUHGWKDWLQFOXGHGSRO\SKRQLFWUHDWPHQW RIDOOWKHQLQHPRYHPHQWVDPRGHVWZRUNE\*LRYDQQL0DWWHRVLQJOHGRXWRQO\DVWKH RQHNQRZQFRPSOHWHWKUHHSDUW5HQDLVVDQFH5HTXLHP,WZDVQRWXQXVXDOIRUDSRO\
SKRQLFPDVVIRUWKHGHDGWRLQFOXGHPRYHPHQWVWKDWGLGQRWEHORQJWRWKH(XFKDULVW EXWWRWKHHQVXLQJEXULDOVHUYLFHRUWKH2IILFHIRUWKH'HDG2QHPRYHPHQWHVSHFLDOO\
GHDUWRWKH5HQDLVVDQFHFRPSRVHUVZDVWKHUHVSRQVRU\/LEHUDPHWRWKH$EVROXWLRQ 2WKHUVWKH\RFFDVLRQDOO\XVHGLQSRO\SKRQLF5HTXLHPVZHUHDQWLSKRQVIRUWKHLQYLWD WRU\0DWLQVDQGWKH%HQHGLFWXVDQGOHVVRQVIURPWKH2IILFHIRUWKH'HDGREYLRXVO\
ZLWKWKHLQWHQWLRQWKDWWKHVHVKRXOGEHVXQJDVSDUWRIWKH2IILFHQRWRIWKH0DVV 7KHUHVSRQVRULHVPRVWIUHTXHQWO\JLYHQDSRO\SKRQLFWUHDWPHQWZHUH3HFFDQWHPPH TXRWLGLH&UHGRTXRG5HGHPSWRUDQG+HXPLKL'RPLQH$OVRIRXQGLQWKLVSHULRGDUH VHSDUDWH2IILFHVHULHVFRQWDLQHGPRVWIUHTXHQWO\DWFHUWDLQMXQFWXUHVLQ0DWLQVPDLQO\
OHVVRQVDQGUHVSRQVRULHVZRUNHGXSLQWRSRO\SKRQLFPRYHPHQWV$OWHUQDWLYHO\WKH ZKROH0DWLQVDQG/DXGVZHUHWUHDWHGDVZDVWKHFDVHZLWKWKH$JHQGDGHIXQF WRUXPRI-XDQ9iVTXH]7KHFRPSRVLWLRQE\*LDFRPR0RURDQG(VWĊYkRGH%ULWR
&KDUOHV :DUUHQ )R[ ³7KH 3RO\SKRQLF 5HTXLHP EHIRUH DERXW ´ %XOOHWLQ RI WKH $PHULFDQ 0XVLFRORJLFDO6RFLHW\2FWREHU
%DUEDUD +DJJK ³7KH 0HHWLQJ RI 6DFUHG 5LWXDO DQG 6HFXODU 3LHW\ (QGRZPHQWV IRU 0XVLF´ LQ
&RPSDQLRQWR0HGLHYDODQG5HQDLVVDQFH0XVLF±
+DJJK³7KH0HHWLQJ´DQG:LOOLDP3UL]HU³0XVLFDQG&HUHPRQLDOLQWKH/RZ&RXQWULHV 3KLOLSWKH)DLUDQGWKH2UGHURIWKH*ROGHQ)OHHFH´(DUO\0XVLF+LVWRU\±
LQZKLFKWKHPRYHPHQWVRIWKH2IILFHDQGRIWKH0DVVRIWKH'HDGDSSHDUFRXQWVDV H[FHSWLRQDO
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
EXWWKHUHDUHUHOLDEOHUHIHUHQFHVWRLWVH[LVWHQFH,QKLVSUHVFULSWLRQVIRUWKHPXVLFWREH SOD\HGDWWKHGHDWKEHGDWWKHEXULDODQGRQWKHGD\DIWHUWKHEXULDO'XID\UHTXHVWV WKDWDIWHUWKH6DFUDPHQWZKHUHWKHVLJQVRIWKHGHDWKWKURHVDUHQRWLFHGWKHUHEHVXQJ ILUVWWKHK\PQEHJLQQLQJ0DJQRVDOXWLVJDXGLRWKHQ$YHUHJLQDFDHORUXPDQGRQWKH GD\DIWHUWKHEXULDOWKH5HTXLHP+HDOVRRUGHUHGWKHK\PQWREHVXQJVXEPLVVDYRFH IDOVHWWRE\HLJKWFKXUFKFKRULVWHUVWKHPRWHWE\WKHVHUYHUER\VZLWKWKHLUPDVWHUDQG WZRPRUHPHQDQGWKH5HTXLHPE\WZHOYHFKRULVWHUV
7KH HDUOLHVW VXUYLYLQJ 5HTXLHP LV E\ -RKDQQHV 2FNHJKHP SUREDEO\ FRPSRVHG DIWHU7KRVHRI$QWRLQH%UXPHO3LHUUHGH/D5XHDQG-RKDQQHV3ULRULVVHHPWR EHIURPWKHWKFHQWXU\DOWKRXJKLQYLHZRIWKHSULPHRIWKHLUFRPSRVHUVWKH\PD\EH IURPWKHWKFHQWXU\DVWKDWRI$QWRLQH)pYLQDOPRVWFHUWDLQO\LV
7KHDUWRIWKHQH[WWZRJHQHUDWLRQVF±FLVPDUNHGE\DQXSVXUJHRI SURIDQHPXVLFDQGQHJOHFWRIPDVVFRPSRVLWLRQ$SDUWIURPWKHZRUNRI3ULRULVRQO\
WKUHHRWKHUVDUHNQRZQE\-HDQ5LFKDIRUW&ODXGLQGH6HUPLV\DQG&ULVWyEDOGH0RUDOHV -DFREXV&OHPHQVQRQ3DSD3LHUUH&OpUHDX6LPRQGH%RQQHIRQG3LHUUH&HUWRQDQG WKH6SDQLDUG-XDQ*DUFtDGH%DVXUWRPD\DOVRKDYHFRPSRVHGWKHLU5HTXLHPVLQPLG FHQWXU\3LHUUHGH0DQFKLFRXUW¶VSLHFHLVVRPHZKDWODWHU
7KH5HTXLHPRI3KLOLSSHGH0RQWH±DQRXWVWDQGLQJILJXUHLQWKHODWHSRO\SKRQLF WUDGLWLRQRIWKH/RZ&RXQWULHVFRQWHPSRUDU\ZLWK/DVVXVDQG3DOHVWULQD±ILWVLQZLWK WKHZRUNRIDVRPHZKDWHDUOLHUSHULRGWKDQKLVRZQ7ZRRWKHUFRPSRVHUVIURPWKH/RZ
&RXQWULHVWRFRPSRVHUHPDUNDEOH0DVVHVIRUWKH'HDGZHUH-DFREXVGH.HUOHDQG-DFR EXV9DHW7KHLU6SDQLVKFRQWHPSRUDU\)UDQFLVFR*XHUUHUREURXJKWRXWWZRDQG -XDQ9iVTXH]DOVR6SDQLVKSURGXFHGKLV$JHQGDGHIXQFWRUXPLQ6HYLOOHLQ 3RO\SKRQLF0DVVHVIRUWKH'HDGEHFDPHIDUPRUHFRPPRQHVSHFLDOO\LQ,WDO\DIWHU 3RSH3LXV9KDGVWDQGDUGL]HGWKH0LVVDOLQ7KHILUVWWRDSSHDULQWKDW\HDUZDV E\9LQFHQ]R5XIIR*LRYDQQL0DWWHR$VRODD9HQHWLDQSXSLORI5XIIRZKRSOD\HGD
ELJSDUWLQLPSOHPHQWLQJWKHLGHDVRI6W&KDUOHV%RUURPHRLQDQHZPXVLFDOVW\OHSUR GXFHGVHYHQ0DVVHVIRUWKH'HDG$QRWKHU,WDOLDQPXVLFLDQZKRVH5HTXLHPFRLQFLGHG ZLWK$VROD¶VZDV&RVWDQ]R3RUWD3DOHVWULQD¶V0DVVIRUWKH'HDGLQFRUSRUDWHGWKHRI IHUWRU\DORQJVLGHWKHLWHPVRIWKH2UGLQDU\7KHUHKDVVXUYLYHGLQPDQXVFULSWLQ6SDLQ DIRXUSDUW5HTXLHPWKDWLQFOXGHVDOOWKHPRYHPHQWVRID0DVVIRUWKH'HDGH[FHSWWKH JUDGXDODQGLVYHU\OLNHO\WREHE\3DOHVWULQD/DVVXV3DOHVWULQD¶VJUHDWFRQWHPSR UDU\FRPSRVHGWZR5HTXLHPV7KHODVWJUHDWFRPSRVHUWRILJXUHLQWKHKLVWRU\RIWKH 5HQDLVVDQFH0DVVIRUWKH'HDGZDVWKH6SDQLDUG7RPiV/XLVGD9LFWRULDIURPZKRP VHYHQKDYHVXUYLYHG
6HYHUDOOHVVHUFRPSRVHUVGHDOWZLWKWKH5HTXLHPIRUPLQWKHODVW\HDUVRIWKH WKFHQWXU\DQGWKHILUVWWHQRIWKHWKFHQWXU\)LUVWDPRQJWKHPZDVWKH)UDQFR 6SDQLVK -RDQ %UXGLHX +LV 6SDQLVK DQG 3RUWXJXHVH FRQWHPSRULHV ZHUH 0DQXHO
&DUGRVR*DEULHO'tD]%HVVyQ'XDUWH/RER)LOLSHGH0DJDOKmHV-RDQ3DX3XMRODQG 0DWHR5RPHUR
7KHPRVWDFWLYHLQFRPSRVLQJ0DVVHVIRUWKH'HDGLQWKHODWHWKFHQWXU\ZHUHWKH ,WDOLDQV$SDUWIURP$VROD*LXOLR%HOOLZDVWKHRQO\WKFHQWXU\FRPSRVHUWRFRP SRVHVHYHUDOWKUHH7KDWRI&HVDUH7XGLQRZDVSXEOLVKHGLQ9HQLFHLQLQDVPDOO IRUPDWERRNOHWRIILYHSDUWPDVVHV-DFRSR0RURLQKLV5HTXLHPXVHGWKHWHFKQLTXHRI DGRXEOHFKRLU)HOLFH$QHULRSXEOLVKHGKLVLQ5RPHLQ2WKHU,WDOLDQ5HTXLHP FRPSRVHUVRIWKHSHULRGZHUH*LRYDQQL)UDQFHVFR$QHULR'RPHQLFR%HOOL*LXVHSSH
%HOORQL6WHIDQR%HUQDUGL*LRYDQQL&DYDFFLR*LRYDQQL&URFH/RUHQ]R9HFFKL2UD ]LR9HFFKL2UIHR9HFFKLDQG/RGRYLFR*URVVLGD9LDGDQD
7KHOHVVZHOONQRZQ*HUPDQFRPSRVHU%ODVLXV$PRQPD\KDYHEHHQWKHRQO\RQH RIKLVFRXQWU\PHQWRSURGXFHDSRO\SKRQLFYHUVLRQRIWKH0DVVIRUWKH'HDG1RWXQWLO PXFKODWHULQZDVKLVH[DPSOHIROORZHGLQ,QQVEUXFNE\WKH*HUPDQ-RKDQQ 6WDGOPD\U7KH)UHQFKVFKRROZKLFKKDGEHHQSDUDPRXQWLQWKHHDUO\SDUWRIWKHWK FHQWXU\KDGYDQLVKHGE\WKHHQGRIWKHFHQWXU\2QO\WZR)UHQFK5HTXLHPFRPSRVHUV FDQEHIRXQGLQWKHILQDOGHFDGH-DFTXHV0DXGXLWRIZKRVHZRUNRQO\DQH[FHUSWVXU YLYHVDQG(XVWDFKHGX&DXUUR\ZKRVHZRUNZDVVXQJXSWRWKHHQGRIWKHWKFHQWXU\
DWWKHIXQHUDOVRI)UHQFKNLQJVLQWKH$EEH\RI6DLQW'HQLV$ORQJVLGHWKHPWKHUHH[LVW VHYHUDODQRQ\PRXVWKFHQWXU\5HTXLHPVWKDWHDFKDSSHDULQRQO\RQHVRXUFH 7KH5HQDLVVDQFH5HTXLHPFRPSRVHUVHYHQDIWHUWKHOLWXUJLFDOWH[WVKDGEHHQVWDQ GDUGL]HGFRXOGVWLOOGHFLGHIRUWKHPVHOYHVZKLFKPRYHPHQWVWRVHWLQVHYHUDOSDUWVDQG ZKLFKWRSURYLGHZLWK*UHJRULDQPHORGLHV7KHSURSRUWLRQVEHWZHHQWKHWZRZHUHDOVR DSHUVRQDOFKRLFHRUDPDWWHURIORFDOWUDGLWLRQ3HUKDSVWKH6SDQLVKFRPSRVHUVZHQW
5REHUW-6QRZ³$Q8QNQRZQ0LVVDSURGHIXQFWLVE\3DOHVWULQD´LQ'HPXVLFDKLVSDQDHWDOL LV0LVFHOiQHDHQKRQRUDO3URI'U-RVp/ySH]&DOR6-HQVXFXPSOHDxRVHGE\(PLOLR
&DVDUHVDQG&DUORV9LOODQXHYD6DQWLDJRGH&RPSRVWHOD8QLYHUVLGDGHGH6DQWLDJRGH&RPSRVWHOD
±
IXUWKHVWLQVWDQGDUGL]LQJWKLV'HVSLWHPDQ\IRUPDOGLIIHUHQFHVWKH\GHYHORSHGLQWKH WK±WKFHQWXU\0DVVHVIRUWKH'HDGVHYHUDOFRPPRQWUDLWVRIZKLFKXQGRXEWHGO\
WKHPRVWLPSRUWDQWZDVEURDGJHQHUDODFFHSWDQFHRI*UHJRULDQFKDQWDVDFRPSRVLQJ EDVLV6RPH5HQDLVVDQFH5HTXLHPVRPLWWKHOLWXUJLFDOFDQWXVILUPXVIRUDQLWHPRUD SDVVDJHEXWWKLVLVXQXVXDODQGODVWVDQRWLFHDEO\VKRUWWLPH7KHFDQWXVILUPXVIHDWXUHV LQDSRO\SKRQLF0DVVIRUWKH'HDGLQORQJQRWHYDOXHVLQIDOVRERUGRQHSDUD SKUDVHGRUE\LQWURGXFLQJDKHDGPRWLIRUPRWWR
'XULQJWKHWK±WKFHQWXU\WKH5HTXLHP*UHJRULDQFKDQWVDSSHDUHGLQYDULRXV YHUVLRQVQRWMXVWLQWKHJUDGXDOEXWLQWKHSRO\SKRQLFPRYHPHQWVDVZHOO'HVSLWHWKH GLIIHUHQFHVWKH0DVVHVIRUWKH'HDGLQWKDWSHULRGUHVWEDVLFDOO\RQWKHVDPH*UHJRULDQ PRGHOV 6SDLQ LV H[FHSWLRQDO LQ LWV WUHDWPHQW RI WKH 2UGLQDU\ WKH .\ULH LV KHDUG WR DGLIIHUHQWPHORG\WKDQWKHXVXDORQHZKLFKZDVORQJDVVRFLDWHGLQWKHUHJLRQVSH FLILFDOO\ZLWKWKH0DVVIRUWKH'HDG7KLVZDVHPSOR\HGLQKLV5HTXLHPE\%DVXUWR LQWKH$JHQGDGHIXQFWRUXPE\9iVTXH]6HYLOOHDQGE\*XHUUHURLQWKHPDVV KHLQFOXGHGLQ/LEHUSULPXVPLVVDUXP3DULV([DPSOH$OOWKH$QGDOXVLDQ FRPSRVHUVDGRSWHGWKH6DQFWXVFKDQWSULQWHGLQ3URFHVVLRQDULXP9DOOHVROHWDQL ([DPSOH7KH6DQFWXVRI0RUDOHVEULQJVDYDULDQWRIWKH'PRGHPHORG\RI0DVV
;9ZKLFKDSSHDUVLQPRGHUQSXEOLFDWLRQV([DPSOH7KH$JQXV'HLPHORG\ZLWK LWV EURNHQ WULDGV DSSHDUV SULPDULO\ LQ WKH$QGDOXVLDQ 5HTXLHPV EXW VSRUDGLFDOO\ LQ RWKHU,EHULDQ0DVVHVIRUWKH'HDGDVZHOO([DPSOH
7KH0DVVIRUWKH'HDGE\5LFKDIRUWLVXQLTXHLQVHYHUDOUHVSHFWV)RURQHWKLQJLWLV WRRXUNQRZOHGJHWKHRQO\UHTXLHPZULWWHQLQFDQRQ)RUDQRWKHUZKLOHWKH*UHJRULDQ FKDQWIRUHDFKPRYHPHQWLVKHDUGIURPDWUHEOHLQSDUDSKUDVHGFDQWXVILUPXVDOOPRYH PHQWVEXWWKHJUDGXDOHYHUVXVKDYHWKHLQYLWDWRU\&LUFXPGHGHUXQWPHHQWHULQJIURP WZRWHQRUSDUWVVLQJLQJLQFDQRQ7KLVPXVLFDOPDWHULDOLVMRLQHGLQWKHJUDGXDOHYHU VXVDQGWKHRIIHUWRU\E\PXVLFDOPDWHULDOTXLWHXQNQRZQLQWKHJHQUHDIUDJPHQWRID -RVTXLQ¶VVRQJ³)DXOWHG¶DUJHQW´OLNHZLVHVXQJLQFDQRQ
7KH RXWZDUG PHDQV RI D F\FOLF VWUXFWXUH DUH QRW XVXDOO\ SUHVHQW LQ D WUDGLWLRQDO UHTXLHP DV HDFK PRYHPHQW EULQJV D GLIIHUHQW *UHJRULDQ FKDQW 6R XQLW\ KDV WR EH DFKLHYHG E\ RWKHU PHDQV WKH HVVHQWLDO XQLW\ RI *UHJRULDQ DQG WKH GLVWLQFW VW\OLVWLF WUDGLWLRQHQVKULQHGLQWKHPRYHPHQWVRID0DVVIRUWKH'HDG
7KH RQH PRYHPHQW WKDW IHDWXUHV LQ HYHU\ 5HQDLVVDQFH 5HTXLHP LV WKH .\ULH ,W JHQHUDOO\KDVWKUHHVHFWLRQVRIPHGLXPOHQJWKDOWKRXJKWKHVHFWLRQVZHUHFRQVLGHUDEO\
VKRUWHQHGWRZDUGWKHHQGRIWKHWKFHQWXU\2QHRIWKHVKRUWHVWRIDOORFFXUVLQ%HOOL¶V IRXUSDUW5HTXLHP$WWKHRWKHUH[WUHPHLVDVROXWLRQHPSOR\HGDWWKHHQGRIWKHFHQ WXU\ZKHUHWKHWKUHHPDLQVHFWLRQVPD\EHGLYLGHGLQWRVHYHUDOVPDOOHUSDVVDJHV7KH EHVWH[DPSOHVDUH0DVVHVE\3ULRULVDQG2FNHJKHP7KHODWWHUGLYLGHVHDFKLQWRWKUHH W\SLFDOVXEVHFWLRQVZKLOH3ULRULVRUJDQL]HVKLV.\ULHLQDOHVVXVXDOZD\7KHILUVWVHF WLRQOLNH2FNHJKHP¶VLVWKHWKUHHSDUWXQLWRI.\ULHHOHLVRQ7KHVHFRQGKDVRQO\RQH SDUWDWZLFHKHDUG&KULVWHHOHLVRQ7KHWKLUGLVLQWZRSDUWVILUVWWKHFORVLQJ&KULVWH HOHLVRQWKHQWKHILUVWRIWKHODVW.\ULHV7KHILQDOVHFWLRQDJDLQIDOOVLQWRWZRSDUWVWKH
Example 1: The Kyrie of the Spanish Mass for the Dead
Example 2: The Sanctus melody of Processionarium Vallesoletani
Example 3: The Sanctus melody employed by Morales
Example 4: The Agnus Dei melody of the Andalusian Masses of the Dead
ODVWWZR.\ULHVRIWKHVHFRQG.\ULHJURXS2WKHUGHSDUWXUHVIURPWUDGLWLRQDOSUDFWLFHLQ WKH5HTXLHPVRI%UXPHODQG6HUPLV\ZKHUHWKHVHFRQG.\ULHJURXSLVGLYLGHGLQWRWZR VXEJURXSV)URPWKHVHFRQGKDOIRIWKHWKFHQWXU\RQZDUGGLYLVLRQRIWKH.\ULHLQWR WKUHHSDUWVEHFDPHVWDQGDUGLQUHTXLHPVDVLWZDVLQ2UGLQDULHVRIWKH0DVVDQGZLWK IHZH[FHSWLRQVWKHUHLVQRFKDQJHRIPHQVXUDOVLJQRUFKDQJHUHGXFWLRQLQWKHQXPEHU RISDUWVLQDQ\VHFWLRQRIWKHPRYHPHQW
8VHRI*UHJRULDQLQWRQDWLRQZDVJHQHUDO5HQDLVVDQFHSUDFWLFHLQPRVW5HTXLHP PRYHPHQWVEXWQRWLQWKH.\ULH7KLVZDVQHYHUSUHFHGHGRUEURNHQLQWRE\D*UHJRULDQ FKDQW7KHFRPPRQHVWNH\VLJQDWXUHIRU.\ULHPRYHPHQWVZDVRQHIODWIRXQGLQDOO 5HTXLHPVEXWWKUHH/D5XH¶VUHPDUNDEOH)XQHUDO0DVVIRUIRXURUILYHORZSDUWVWUDQV SRVHVWKHFDQWXVILUPXVDILIWKGRZQDQGXVHVDWZRIODWNH\VLJQDWXUH7KH.\ULHRI )pYLQ¶V6ROHPQ5HTXLHPJLYHVWZRNLQGVRINH\VLJQDWXUHWKHXSSHUSDUWVKDYHRQH IODWEXWWKHEDVVKDVIODWVH[FHSWDWWKHEHJLQQLQJZKHUHKHOHDYHVWKHRQHIODW7KH IRXUSDUW0DVVRI/DVVXVLVWKHRQO\RQHZLWKQRNH\VLJQDWXUH
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
7KHRWKHU2UGLQDU\PRYHPHQWVRIWKH5HTXLHPWKH6DQFWXVDQG$JQXV'HLRFFXU LQDOOWKHZRUNVH[DPLQHGH[FHSW2FNHJKHP¶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
7KH6DQFWXVPRYHPHQWRIWKHSRO\SKRQLF2UGLQDU\RIWKH0DVVLVPRUHXQLIRUP WKDQLQWKH5HTXLHPLQVWUXFWXUHPHWHUQXPEHURISDUWVDQGLQWRQDWLRQV6WUXFWXUDOO\
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
&DoDGRHV0RUDOHVVHWWKH6DQFWXVFRQWLQXRXVO\ZLWKRXWLQWHUQDOEUHDNV9LFWRULDLQ WZR0DVVHV0LVVD$YHPDULVVWHOODDQG0LVVD$YH5HJLQDXVHGDOHVVXVXDOSURFHGXUH XQNQRZQLQ3DOHVWULQDRU0RUDOHVZKHQKHVSOLW6DQFWXVIURPWKHILUVW+RVDQQDEXW FRPSRVHG%HQHGLFWXVWKURXJKZLWKWKHVHFRQG+RVDQQD
7XUQLQJ WR WKH PHQVXUDO QRWDWLRQ LW EHFDPH JHQHUDO WR VHW+RVDQQD , DQGRU +RVDQQD,,WRDPHWHUZLWKDQRGGQXPEHURIEHDWV5HGXFLQJWKHQXPEHURISDUWV LQ%HQHGLFWXV LV DOPRVW LQYDULDEOH LQ WKFHQWXU\ 2UGLQDULHV RI WKH 0DVV EXW RQO\
VSRUDGLFLQ0DVVHVIRUWKH'HDG7KH3OHQLVXQWFDHOLVHFWLRQDSSHDUVLQPDQ\PDVVHV ZLWKDUHGXFHGQXPEHURISHUIRUPHUV,WLVZRUWKQRWLQJWKDW3DOHVWULQDZKHQUHGXFLQJ WKHQXPEHURISDUWVGLIIHUHGIURPRWKHUFRPSRVHUVLQQRWPHUHO\MHWWLVRQLQJRQHSDUW IURPWKHRULJLQDODSSDUDWXVEXWE\DYRLGLQJSRO\SKRQ\DQGGLYLGLQJWKHUHPDLQGHUV ZKLFKKDGGHFLVLYHFRQVHTXHQFHVIRUWKHDFWXDOSHUIRUPLQJDSSDUDWXVDQGVXSSRUWV
%UXPHO'X&DXUUR\*XHUUHURDQG3DOHVWULQD3RUWDDQG9iVTXH]
&HUWRQ*XHUUHURDQG/D5XH0RUDOHV0RUDOHVDQG9LFWRULDDQG
%UXGLHXDQG&OHPHQV
WKHK\SRWKHVLVWKDWWKHVHSDVVDJHVZHUHWREHVXQJE\VRORLVWV7KHQRWLRQWKDWWKLV ZDVFRPPRQSUDFWLFHLVVXSSRUWHGIXUWKHUE\WKHIDFWWKDWLIWKHQXPEHURISDUWVZDV QRWUHGXFHGWKHQHDFKKDGWREHVXQJE\DVLQJOHVLQJHUVLJQLILHGLQWKHVFRUHE\WKH LQVWUXFWLRQVFXPTXDWXRUYRFLEXVRUTXLQTXHWDQWXPYRFLEXV,QWRQLQJKDUGO\DSSHDUV DWDOOLQWKH6DQFWXVPRYHPHQWRISRO\SKRQLF2UGLQDULHVRIWKH0DVV
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¶IRXUSDUW0DVV7KHUHLVDOVRDNH\VLJQDWXUHRIRQHIODWIRUWKH$JQXV'HLLQ 0RUDOHVD3RUWD7XGLQRDQG$PRQ
7UHDWPHQWRIWKH$JQXV'HLPRYHPHQWLQWKHSRO\SKRQLF2UGLQDU\RIWKH0DVV GLIIHUVIURPWKDWLQWKH0DVVIRUWKH'HDG7KHWKUHHIROGGLYLVLRQW\SLFDORIWKHODWWHU LVIRXQGRQO\LQ0RUDOHV¶VL[2UGLQDULHVRIWKH0DVVQRWLQWKHF\FOHVRI3DOHVWULQDRU 9LFWRULD$GRXEOHVWUXFWXUHLVDOPRVWH[FOXVLYHO\IRXQG2QO\WKH3URYLFWRULDPDVV RI9LFWRULDWUHDWVWKHWH[WDVDVLQJOHXQLW2QWKHRWKHUKDQGVHYHUDORPLWWKHSKUDVH GRQDQRELVSDFHPIURPWKHILQDOVHFWLRQ±3DOHVWULQDLQVHYHQPDVVHVDQG9LFWRULDLQ QLQH±DOWKRXJKWKH0LVVD5HJLQDFDHOL0DVV%RRNDQGWKHODVW0LVVD9LGLVSH FLRVDPF\FOHLQFOXGHRQO\WKLVVHFWLRQRPLWWLQJWKHRQHEHIRUH,QWKHSDUWWUHDWPHQW LWLVFRQYHQWLRQDOWRUDLVHWKHQXPEHURISDUWVLQWKHWKLUGVRORVHFWLRQRIWKH$JQXV 'HLXVXDOO\E\RQHEXWVRPHWLPHVPRUHGUDVWLFDOO\IURPIRXUWRVHYHQ'HSDUWXUHV IURPWKLVDUHXVXDOO\H[SODLQDEOHLQVWUXFWXUDOWHUPV7KHQXPEHURISDUWVLQWKHPLGGOH VHFWLRQRI0RUDOHV¶WKUHHSDUWPRYHPHQWVVWHDGLO\IDOOVVRWKDWLQIRXUFDVHVWKHWKLUG VHFWLRQEULQJVEDFNWKHRULJLQDOVRORDQGLQWZR9XOQHUDVWLFRUPHXPO+RPPHDUPp H[WUDSDUWVDSSHDU2QO\RQFHLQ3DOHVWULQD0LVVD$YH0DULDWK0LVVDODQGRQFHLQ 9LFWRULD0LVVD4XDPSXOFKULVXQWVW0LVVDOLVWKHUHDVWHDG\ULVHLQWKHQXPEHURI SDUWVIURPVHFWLRQWRVHFWLRQ:KHUHWKHPRYHPHQWHQGVZLWKWKHWH[WPLVHUHUHQRELV 3DOHVWULQDZLWKWKHRQHH[FHSWLRQRI0LVVD,QLOORWHPSRUHWK0LVVDOOHDYHVWKH VRORXQFKDQJHGZKLOH9LFWRULDUDLVHVLW7KH$JQXV'HLRIWKH2UGLQDU\RIWKH0DVV GLIIHUVIURPWKDWRIWKH5HTXLHPLQYHU\VHOGRPLQWURGXFLQJLQWRQDWLRQ
7KHLQWURLWDQGRIIHUWRU\PRYHPHQWVRIWKH3URSHURIWKH0DVVIRUWKH'HDGUHFHLYHG SRO\SKRQLFWUHDWPHQWVWLOOPRUHRIWHQWKDQWKRVHRIWKH2UGLQDU\7KHQH[WLQRUGHURI IUHTXHQF\LQWKLVUHVSHFWZDVWKH&RPPXQLRQZKLOHWKH*UDGXDOZDVVRWUHDWHGLQ RIWKH0DVVHVH[DPLQHGWKH6HTXHQFHLQDQGWKHWUDFWLQ
7KHWKUHHVHFWLRQIRUPRIWKH*UHJRULDQLQWURLWGHFLGHVWKHVWUXFWXUDOSODQRISRO\
SKRQLFWUHDWPHQW5HQDLVVDQFHFRPSRVHUVIUHTXHQWO\GLYLGHGWKHSVDOPLQWZRZLWK WKH VHFRQG SDUW EHJLQQLQJH[DXGL RUDWLRQHP PHDP7KH PRVW LPSRUWDQW GLIIHUHQFHV
DPRQJWKHYDULRXVSRO\SKRQLFLQWURLWVOLHLQWKHFKRLFHRINH\DQGRIQXPEHURISDUWV 7KHLQLWLDO*UHJRULDQLQWRQLQJRIDSRO\SKRQLFLQWURLWH[WHQGVWRWKHILUVWZRUGRIWKH WH[W5HTXLHPDQGVRPHWLPHVWRWZRZRUGV5HTXLHPDHWHUQDPDOWKRXJKWKLVSURFHG XUHLVIROORZHGRQO\E\WKH6SDQLVKFRPSRVHUVDSDUWIURPVRPHZRUNVRI5XIIRDQG
$QHULR7KHSVDOPYHUVHRIWKHLQWURLWLVOLNHZLVHLQWURGXFHGE\LQWRQLQJ7HGHFHWK\P QXV'HXVLQ6LRQ7KH*UHJRULDQFKDQWVDUHPRVWIUHTXHQWO\VXQJE\WKHWHQRURUWUHEOH RURFFDVLRQDOO\E\ERWKDV)pYLQJLYHVWKHLQLWLDOLQWRQLQJWRWKHWUHEOHDQGWKDWRIWKH SVDOPWRWKHWHQRU7KHGHSDUWXUHVIURPWKHQRUPDUHDVZLWKWKH6DQFWXVDQG$JQXV'HL PRYHPHQWV/DVVXVEDVV9LFWRULDQGWUHEOH5XIIRDOOVL[SDUWV
7KHNH\VLJQDWXUHRIPRVWSRO\SKRQLFLQWURLWVLVRQHIODWZKLFK2FNHJKHPDQG
%UXPHORPLWEXWZULWHRXWLQWKHPRYHPHQW)pYLQ¶VLQWURLWOLNHKLV.\ULHKDVDGRXEOH NH\VLJQDWXUHKHZULWHVWZRIODWVIRUWKHEDVVLQPRVWPRYHPHQWV/D5XH¶VLQWURLWLV WKHRQO\RQHLQZKLFKWKHFDQWXVILUPXVPDUNHGZLWKWZRIODWVPRYHVDIXOOILIWKORZHU ZKLOHWKHLQWURLWWRWKHIRXUSDUW5HTXLHPE\/DVVXVRPLWVWKHFXVWRPDU\NH\VLJQDWXUH DQGWUDQVSRVHVWKHFDQWXVILUPXVDILIWKKLJKHU
6LQFHWKH*UHJRULDQJUDGXDOV6LDPEXOHPRU5HTXLHPDHWHUQDPZHUHDOWHUQDWLYHV LQWKH0DVVIRUWKH'HDGLQWKHWK±WKFHQWXU\LWLVXQVXUSULVLQJWRILQGSRO\SKRQLF VHWWLQJVRIERWKLQYDULRXV5HQDLVVDQFH5HTXLHPV0RVW0DVVHVIRUWKH'HDGWKDWLQ FOXGHGDJUDGXDODERXWKDOIRIWKRVHH[DPLQHGVHWWKHWH[W6LDPEXOHPWRPXVLFEXW WKLVZDVRPLWWHGIURPWKH*UHJRULDQ)XQHUDO0DVVZKHQWKH0LVVDOZDVUHYLVHGLQ WKHILQDOGHFDGHVRIWKHWKFHQWXU\DQG5HTXLHPDHWHUQDPVXEVWLWXWHGIRULW7KH RQO\SRVWUHIRUPWKFHQWXU\SRO\SKRQLF5HTXLHPWRXVH6LDPEXOHPLVRQHE\'X
&DXUUR\7KHIRXUSDUW5HTXLHPE\/DVVXV>@XVHV6LDPEXOHPEXWZDVSURE DEO\FRPSRVHGEHIRUHWKH0LVVDOZDVLQWURGXFHG'X&DXUUR\¶VDGKHUHQFHWRWKH ROGHUWH[WPD\PHDQHLWKHUWKDWHLWKHUWKH\GLGQRWZRUU\WKHPVHOYHVDERXWWKHOLWXUJLFDO UHIRUPVDWOHDVWLQWKHQRUWKHUQFRXQWULHVRUWKDW3RSH3LXV9¶V0LVVDOKDG\HWWRUHDFK 3DULVDWWKHWLPHRIFRPSRVLWLRQ
$OWKRXJKWKHJUDGXDO6LDPEXOHPZDVPRUHSRSXODUWKDQ5HTXLHPDHWHUQDPWKH ODWWHUZDVFKRVHQE\DOOWKH6SDQLVKFRPSRVHUVQRQHRIZKRPIDLOHGWRJLYHLWSRO\
SKRQLFWUHDWPHQW7KH)UDQFR)OHPLVKFRPSRVHUVRIWKHWK±WKFHQWXULHVSUHIHUUHG 6L DPEXOHP RU RPLWWHG WKH PRYHPHQW DOWRJHWKHU IURP WKHLU 0DVVHV7KH WZR QRQ 6SDQLVKFRPSRVHUVWRFRPSRVH)XQHUDO0DVVHVWKDWLQFOXGHGWKH5HTXLHPDHWHUQDP JUDGXDOZHUH$PRQDQG$VROD
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
LQRWKHUVWKHUHZDVDGUDPDWLFHIIHFWDIWHUDFDGHQFHDQGFDHVXUDLQWKHVLQJLQJSDUWV
$UDWKHUGLIIHUHQWWUHDWPHQWRI9LUJDWXDFDQEHIRXQGLQZRUNVE\)pYLQDQG.HUOH ZKRUHGXFHGWKHQXPEHURISDUWVIRUWKHZKROHSDVVDJH0RQWHGLGQRWDOWHUWKHYRFDO WH[WXUHZKHUHDV2FNHJKHPUDLVHGWKHQXPEHURISDUWVLQWKLVSDVVDJH7KHWUHDWPHQW RIWKHPRYHPHQWLQ/DVVXV¶IRXUSDUW0DVVIRUWKH'HDGGLIIHUVIURPWKDWRIRWKHUFRP SRVHUVLQGLYLGLQJLWLQWRWKUHHLQVWHDGRIWZRVHFWLRQV$PDLQVHFWLRQXVLQJWKHIXOO DSSDUDWXVLVIROORZHGE\DWHQRUDQGEDVVLQWKHILUVWSDUWRI9LUJDWXDUHWXUQLQJDWLSVH PHWRWKHIRXUSDUWDUUDQJHPHQW/DVVXVGLIIHUHGIURPRWKHUVLQVFRULQJWKHILUVWKDOIIRU ORZUDWKHUWKDQWKHKLJKSDUWVIRXQGLQRWKHUSLHFHV
6LPLODUWUHDWPHQWRIWKHYRFDOPDWHULDOLVIRXQGLQWKHIHZJUDGXDOVWKDWVHWWKH 5HTXLHPDHWHUQDPWH[W7KH5HTXLHPVRI0RUDOHVDQG*XHUUHURUHGXFHWKHQXPEHURI SDUWVDWWKHEHJLQQLQJRIWKH,QPHPRULDDHWHUQDYHUVLFOHWKHIRUPHURPLWWLQJWKHORZHU SDUWWKHODWWHUWKHWRSWKUHH,QWKHRWKHU)XQHUDO0DVVHVWKDWXVH5HTXLHPDHWHUQDP WKHQXPEHURISDUWVLQWKHPDLQVHFWLRQDQGWKHYHUVLFOHGRHVQRWFKDQJH
7KHFRPSRVHUVGLIIHUIDUOHVVLQWKHLUWUHDWPHQWRIWKHJUDGXDOLQWRQDWLRQVWKDQLQ WKHLUFKRLFHRIPRYHPHQWV5HTXLHPVWKDWLQFOXGH6LDPEXOHPDOOPDUNLWVILUVWWZR ZRUGVDVLQWRQDWLRQ7KH6SDQLVKFRPSRVHUVIDYRULQJWKH*UDGXDO5HTXLHPDHWHUQDP OLNHZLVHKDYHWKHILUVWWZRZRUGVVXQJWRD*UHJRULDQFKDQW$PRQRQWKHRWKHUKDQG OLPLWVWKHLQWRQLQJWRWKHILUVWZRUG2IWKHZRUNVH[DPLQHGWKHWKUHHSDUW5HTXLHPRI
$VRODLVWKHRQO\RQHQRWWRLQWURGXFHWKHPRYHPHQWZLWKLQWRQDWLRQ9LFWRULDRQWKH RWKHUKDQGHYHQEHJLQVWKHYHUVLFOHRIWKH*UDGXDOLQWKDWZD\,QPHPRULDDHWHUQD 7KHFRPSRVHUVJHQHUDOO\FKRRVHWKHVDPHSDUWVIRUWKHLQWRQDWLRQDVWKH\KDGDVVLJQHG LQWKHLQWURLWPRVWRIWHQWKHWHQRURUWUHEOH
7KHUHLVQRWXVXDOO\DNH\VLJQDWXUHLQWKHSRO\SKRQLF*UDGXDOPRYHPHQWV0RQWH
*XHUUHURDQGDQG/DVVXVXVHWKHIRXUIODWNH\VLJQDWXUHEXWRIWKHIRXU RQO\*XHUUHURDQG/DVVXVWUDQVSRVHWKHFDQWXVILUPXV
'LIIHUHQFHVVLPLODUWRWKRVHLQWKH*UDGXDODSSHDULQWKHWUDFW$OOSUH7ULGHQWLQH 6SDQLVKSRO\SKRQLF5HTXLHPVKLWKHUWRIRXQGDORQJZLWKWKH)XQHUDO0DVVHVRI)pYLQ /D5XH2FNHJKHPDQG9DHWXVHWKHWH[W6LFXWFHUYXV7KHRWKHUFRPSRVHUVVHWWKHRQH SLHFHRIWKHUHIRUPHG0LVVDO$EVROYH'RPLQH7KHHGLWLRQRIWKH*XHUUHUR 0DVVIRUWKH'HDGKDG6LFXWFHUYXVEXWWKLVZDVH[FKDQJHGIRU$EVROYH'RPLQHLQ WRFRQIRUPZLWKWKH0LVVDO
'LYLVLRQ RI WKH 5HTXLHP WUDFW LQWR WKUHH SDUWV LV IRXQG LQ DOO FRPSRVHUV H[FHSW
*XHUUHUR&OHPHQVDQG2FNHJKHP*XHUUHURGRHVQRWVHWWKHODVWYHUVH)XHUXQWPL KLRI6LFXWFHUYXVDQGRQO\JLYHVSRO\SKRQLFWUHDWPHQWWRWKHILUVWYHUVHRI$EVROYH 'RPLQH&OHPHQVFRPSRVHVWKURXJKWKHZKROHWH[WRI$EVROYH'RPLQHDVDVLQJOHFR KHUHQWPRYHPHQW2FNHJKHPGLYLGHV6LFXWFHUYXVLQWRIRXUE\WDNLQJWKHILQDOVHQWHQFH 8ELHVW'HXVWXXVVHSDUDWHO\
0RVW ZRUNV SLFN RXW VRPH VHFWLRQV RI WKH WUDFW E\ XVLQJ YDULRXV SDUW FRPELQ DWLRQV7KHFRPPRQHVWSUDFWLFHILUVWIRXQGLQ2FNHJKHP¶V0DVVIRUWKH'HDGLVIRU WKHPRYHPHQWWRVWDUWLQWKHWUHEOHDQGDOWRWKHQH[FKDQJHWKHVHIRUWHQRUDQGEDVVLQ
WKHQH[WYHUVHDQGJLYHWKHODVWVHFWLRQWRWKUHHSDUWVWUHEOHDOWRDQGWHQRU/D5XHDQG 9DHWGHSDUWIURPWKLVRQO\LQKDYLQJDILQDOYHUVHLQIRXUSDUWVLQVWHDGRIWKUHH)pYLQ¶V WUDFWEHJLQVLQWKHWHQRUDQGEDVVZKLFKDUHMRLQHGE\DIXUWKHUSDUWLQHDFKYHUVH /DVVXV¶TXLWHGLIIHUHQWVROXWLRQLVIRUWKHPRYHPHQWWREHODXQFKHGDQGFRQFOXGHGE\
WKHIXOOFKRLUEXWWRFXWWRWKUHHSDUWVIRUWKHPLGGOHVHFWLRQ2QO\WZRWUDFWVEHJLQZLWK LQWRQDWLRQE\/DVVXVDQG&OHPHQV$OOSRO\SKRQLFWUDFWVZKHWKHUWR6LFXWFHUYXVRU WR$EVROYH'RPLQHKDYHWKHFDQWXVILUPXVVXQJZLWKRXWWUDQVSRVLWLRQDQGGRQRWZULWH RXWLQWKHIODWSUHVFULSWLRQ
'LHVLUDHLVWKHORQJHVWVHSDUDWHPRYHPHQWRIWKH*UHJRULDQ0DVVIRUWKH'HDG
$OWKRXJKLWZDVIDYRUHGIURPLWVILUVWDSSHDUDQFHSRO\SKRQLFVHWWLQJVRILWDUHDOPRVW DVUDUHLQ5HQDLVVDQFH0DVVHVIRUWKH'HDGDVWKHWUDFWSLHFHV7KLVPD\EHSDUWO\GXH WRLWVUHODWLYHO\ODWHDUULYDOLQWKHOLWXUJ\DQGSDUWO\WRDSRVLWLYHSUHIHUHQFHIRUWKH
*UHJRULDQYHUVLRQRIWKHVHTXHQFH7KHHDUOLHVWNQRZQ0DVVIRUWKH'HDGWRLQFOXGHD SRO\SKRQLF'LHVLUDHLVE\%UXPHO+H.HUOHDQG0RUDOHVUHPDLQWKHRQO\FRPSRVHUV WRLQFOXGHDSRO\SKRQLFVHTXHQFHLQD0DVVIRUWKH'HDGEHIRUH+RZHYHUVXFK LVIRXQGLQDOOEXWRQH,WDOLDQ5HTXLHPFRPSRVHGRUSXEOLVKHGEHWZHHQDQG 3DOHVWULQD¶V )XQHUDO 0DVV RPLWV WKH VHTXHQFH DORQJ ZLWK PRVW RI WKH LWHPV RI WKH 3URSHU1R0DVVIRUWKH'HDGFRPSRVHGE\DQRQ,WDOLDQLQWKHODVWWKUHHGHFDGHVRI WKHWKFHQWXU\FRQWDLQVDVHTXHQFH
$PRQJWKH5HTXLHPVLQZKLFKDVHTXHQFHDSSHDUVRQO\WZRVHWWKHIXOOWH[WDVWKH SUDFWLFHZDVWRPDNHDOWHUQDWHYHUVHVSRO\SKRQLFDQG*UHJRULDQ*LDFRPR0RURDQG
*LXOLR%HOOLLQWKHLUGRXEOHFKRLU0DVVHVIRUWKH'HDGJLYHWKHIXOOWH[WRIWKHVHTXHQFH DOWHUQDWHO\WRWKHWZRFKRLUV0DQ\IROORZWKHIRUPRIWKH*UHJRULDQLWHPLQWKHLUVHW WLQJVLHIRUPLQJWKUHHVWURSKHVZKRVHPXVLFLVUHSHDWHGWKUHHWLPHV'LHVLUDH 4XLGVXPPLVHU4XL0DULDPWKHQFRQFOXGLQJWKHPRYHPHQWZLWKWKH-XGLFDQGXV DQG3LH-HVXVHFWLRQV([DPSOHVRIWKLVSUDFWLFHDSSHDULQ%HOOL¶VIRXUSDUWDQGGRXEOH FKRLU0DVVHVIRUWKH'HDGDQGLQ7XGLQR¶V5HTXLHP7KHW\SLFDOIRUPDOVROXWLRQVIRU WKHWKFHQWXU\SRO\SKRQLFVHTXHQFHLVIRUFRPSRVHUVWRWUHDWHDFKYHUVHDVDVHSDUDWH XQLWDQGDOWKRXJKWKHDSSURSULDWH*UHJRULDQFKDQWDSSHDUVLQHDFKVHFWLRQDVWKHFDQ WXVILUPXVWKHSRO\SKRQLFPRYHPHQWVZLWKWKHVDPHPHORG\DUHGLIIHUHQWLQHDFKFDVH 0RUDOHV¶0DVVIRUWKH'HDGLVXQXVXDOLQGLVUHJDUGLQJWKHVWURSKLFVWUXFWXUHRI'LHV LUDHDQGFRPSRVLQJLWWKURXJKDVDVLQJOHFRQWLQXRXVSLHFH$VROD¶V5HTXLHPIRUIRXU GHHSSDUWVDQGWKHPRYHPHQWLQWKH0DVVHVRIWKH'HDGE\3RUWDDQG$QHULRUHYHUVH WKHXVXDORUGHURISRO\SKRQ\DQG*UHJRULDQE\EHJLQQLQJZLWKWKHODWWHUDQGPDNLQJ WKHHYHQYHUVHVSRO\SKRQLF
7KHIODWNH\VLJQDWXUHLVQRWXVHGLQVHTXHQFHVZKHUHWKHFDQWXVILUPXVLVQRWWUDQV SRVHGEXWXVHGFRQVLVWHQWO\ZKHUHLWLVWUDQVSRVHGDIRXUWKXSRUDILIWKGRZQ
5HQDLVVDQFH5HTXLHPVDOPRVWDOZD\VLQFOXGHD'RPLQH-HVX&KULVWHPRYHPHQW SUREDEO\EHFDXVHWKLVZDVDQHVWDEOLVKHGSDUWRIWKHOLWXUJ\ORQJEHIRUHSRO\SKRQ\DS SHDUHG)XUWKHUPRUHLWWRRNWLPHWRSUHSDUHWKH(XFKDULVWLF+RVWVRWKDWDEURDGSRO\
SKRQLFFRPSRVLWLRQZDVSUDFWLFDOLQDOO+LJK0DVVHVQRWMXVW5HTXLHPV7KHW\SLFDO
LWHPVRIWKHRIIHUWRU\LQ5HQDLVVDQFH0DVVHVIRUWKH'HDGSURYLGHGPRUHWKDQDGHTXDWH WLPHIRUSUHSDULQJWKHDOWDUDVWKLVZDVWKHORQJHVWPRYHPHQWXQOHVVWKHVHTXHQFHDOVR DSSHDUHG+RZHYHUWKH5HTXLHPVRI%UXPHODQG5XIIRGRQRWFRQWDLQDQRIIHUWRU\
K\PQDOWKRXJKWKHPRWHW5XIIRZURWHWRWKHRIIHUWRU\WH[WSXEOLVKHGE\&DVWLOOLRQHV LQWKHVHFRQGHGLWLRQRIKLVERRNRIPRWHWVPD\KDYHEHHQXVHG7KHPRWHWGRHV QRWLQFOXGHWKHILQDOVHQWHQFHRIWKHILUVWSDUWRIWKHRIIHUWRU\RUWKHYHUVLFOHEXWWKDW GRHVQRWSUHFOXGHLWVXVHLQWKH0DVVDVVXFKRPLVVLRQVFRXOGHDVLO\EHPDGHXSZLWK WKHUHTXLVLWH*UHJRULDQFKDQW
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
,WLVW\SLFDOPDLQO\RIODWHWKFHQWXU\5HTXLHPVWRVHWWKHRIIHUWRU\LQDGLIIHUHQW PRGHZLWKWKHPDLQVHFWLRQSRO\SKRQLF,IWKHFRPSRVHUWUHDWVWKHUHSHWHQGDDVDVHS DUDWHXQLWWKH+RVWLDVHWSUHFHVYHUVLFOHUHWXUQVDIWHUWKH*UHJRULDQPHORG\9LFWRULD¶V IRXUSDUW5HTXLHP%XWLQPDQ\RWKHUZRUNVWKHUHWXUQRIWKHUHSHWHQGD4XDPROLP
$EUDKDHFDQQRWEHDFFRPSOLVKHGEHFDXVHLWLVKDQGOHGDVDQLQWHJUDOLQVHSDUDEOHSDUW RIWKHPDLQVHFWLRQ9LFWRULDD%UXGLHX%HOOLD7XGLQRDQG0RUR
7KHLQWRQDWLRQVVSHFLILHGLQWKHRIIHUWRU\DQGLQLWVYHUVLFOHVKRZDVPDQ\GLIIHU HQFHVDVDSSHDULQWKHLQWURLW7KHRSHQLQJFKDQWFRYHUVWKHILUVWWKUHHZRUGVLQPRVW FDVHV7XGLQR¶V5HTXLHPKDVDVKRUWHUSDVVDJHRILQWRQDWLRQ'RPLQHEXWWKH6SDQLVK FRPSRVHUVXVHDORQJHU'RPLQH-HVX&KULVWH5H[JORULDH$IHZZRUNVGRQRWSUH VFULEHDQ\RSHQLQJLQWRQDWLRQ7KHZRUGV+RVWLDVHWSUHFHVWLEL'RPLQHODXGLVRIIHULPXV ZRXOGEHKHDUGLQ*UHJRULDQFKDQWEHIRUHWKHRIIHUWRU\YHUVLFOH$PRQ¶VLVWKHRQHLQ WRQDWLRQWRGLIIHUIURPWKHXVXDOH[WHQWE\RPLWWLQJWKHILUVWWZRZRUGV2QRFFDVLRQVWKH LQWRQDWLRQRIWKHYHUVLFOHLVOHIWRXWDOWRJHWKHU0RVW5HQDLVVDQFHRIIHUWRULHVGRQRWXVH DIODWVLJQDWXUH7KRVHWKDWGRWUDQVSRVHWKHFDQWXVILUPXVDIRXUWKXSRUDILIWKGRZQ 7KHODVWVXQJPRYHPHQWRIWKH0DVVIRUWKH'HDGH[FHSWIRUWKHILQDOVHQWHQFH 5HTXLHVFDQWLQSDFHLVWKHFRPPXQLRQ/X[DHWHUQD7KLVLVRPLWWHGLQRQO\ILYHRIWKH NQRZQWK±WKFHQWXU\5HTXLHPV0RVWFRPSRVHUVVHWWKHWH[WLQDVLPLODUZD\DO ORZLQJIRUWKHWZRVHFWLRQIRUPRIWKHFDQWXVILUPXVZKRVHWZRVHFWLRQVDVZLWKWKH RIIHUWRU\HQGLQWKHVDPHZRUGVFXPVDQFWLVWXLVLQDHWHUQXPTXLDSLXVHV7KHUH SHDWHGVHFWLRQZDVXVXDOO\VFRUHGDJDLQDWWKHHQGRIWKHPRYHPHQWWKRXJKWKHFKDQJHV WKHUHZHUHQRWVLJQLILFDQWRQHVEXWVRPH5HTXLHPVFRPSRVHGLQWKHHDUO\WKFHQWXU\
SUHVFULEHDQH[DFWUHSHDWRIWKHFXPVDQFWLVWXLVVHFWLRQ
,QWRQDWLRQLQWURGXFHGERWKSDUWVRIWKHFRPPXQLRQK\PQIRUWKHDQWLSKRQDOZD\V /X[DHWHUQDDQGIRUWKHYHUVLFOH5HTXLHPDHWHUQDPGRQDHLV'RPLQH7KHUHZHUHFDVHV RIXQVSHFLILHGLQWRQDWLRQLQWKHRULJLQDOHGLWLRQEXWLWFHUWDLQO\ZDVXVHGLQSHUIRUP DQFHPRVWRIWHQLQWKHWHQRURUWUHEOH1RQWUDGLWLRQDOH[FHSWLRQVDSSHDULQWKHLQWURLWV RIVRPH5HTXLHPV7KHRSHQLQJLQWRQDWLRQLVODFNLQJLQ*XHUUHUR%HOOL DQG0RURZKHUHWKHFRPPXQLRQEHJLQVZLWKSRO\SKRQ\2QO\RQHFRPPXQLRQ K\PQKDVDIODWVLJQDWXUH7KDWLQWKH/DVVXV¶IRXUSDUW0DVVIRUWKH'HDGPDUNVD WUDQVSRVLWLRQGRZQRIDILIWKLQWKHFDQWXVILUPXV
7KHFRPPXQLRQHQGVWKHVXQJPRYHPHQWVRIWKH0DVVIRUWKH'HDGH[FHSWLQWKH RQHH[DPSOHRIDSRO\SKRQLFFRQFOXGLQJ5HTXLHVFDQWLQSDFHDQGLWV$PHQWKHZRUN RI-XDQ(VTXLYHOGH%DUDKRQD5HTXLHVFDQW66$7$PHQ66$7%+RZHYHUPDQ\
WKFHQWXU\5HTXLHPLQFOXGHVSHFLDOPRYHPHQWVXVHGLQWKHEXULDODQGQHYHUWKHP VHOYHVSDUWRIWKH0DVV7KHRQO\ZLGHVSUHDGDGGLWLRQLVDSRO\SKRQLFUHQGHULQJRI WKHUHVSRQVRU\IRUWKH$EVROXWLRQ,QVRPHFDVHVSDUWVRIWKH2IILFHIRUWKH'HDGZHUH SODFHGEHIRUHWKHSRO\SKRQLFPRYHPHQWVRIWKH5HTXLHPEXWPDQ\RWKHUFRPSRVHUV LQVHUWHGPRWHWVZKRVHWH[WVIRUPHGQRSDUWRIWKHOLWXUJ\IRUWKHGHDG
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
DWKUHHIROGGLYLVLRQ7KHVWUXFWXUHRIWKH5HTXLHP¶V6DQFWXVVKRZVIDUJUHDWHUYDULHW\
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